SEC Advisory Committee Focuses On Digital Engagement Practices

At a meeting of the SEC Asset Management Advisory Committee, SEC officials challenged members to consider how advances in financial technologies impact investors and the advice they receive.

SEC Chair Gary Gensler highlighted the potential for predictive data analytics and other digital engagement practices ("DEPs") to change an investor's trading patterns or investment strategy. He questioned whether DEPs are maximizing investors' returns or the revenues of the platforms. Mr. Gensler reiterated concerns regarding (i) conflicts of interest when DEPs optimize for platform revenues, (ii) whether DEPs constitute recommendations or investment advice and (iii) historical biases in DEP algorithms (see related coverage here and here).